The ‘shadow PS’: Feds pay minimum wage to thousands of temps

Prof. Gordon Betcherman is a labour economist and demographer, is quoted in article on wage trends for temporary government employees. Photo by Jean Levac/Ottawa Citizen For Ottawa Citizen story by , CITY Assignment #116921

Photograph by: Jean Levac
, Ottawa Citizen

The job, when you come across it on the staffing agency website, looks promising. Government finance clerk, accounting degree required. You’ve got that.

Three years experience. That too.

Conversational French? Un petite peu, but probably enough.

Just a five-week contract, but hey, maybe it could lead to more.

Then you see the hourly rate: $10.25 — Ontario’s minimum wage.

You move on. The recycling plant, you notice, needs sorters. Must have basic reading, writing and math and be able to perform physical tasks. Pay is $11 an hour. Maybe more when Ontario bumps the minimum wage on June 1 by 75 cents.

And already better than government work.

It seems no one can remember a time when contracts for temporary federal workers paid so little. The personnel agency industry — a sector feeling the pinch as much as the people it recruits for these jobs — estimates that wages have fallen by as much as 50 per cent from 2008.

The industry feels betrayed by what it views as the abandonment of government policies that held wages higher but were meant to ensure a steady supply of qualified, capable applicants.

And no one expects the big squeeze, driven by reasons perhaps as ideological as fiscal, to ease anytime soon.

“Sadly,” says Martin Chénier of the Association of Canadian Search, Employment and Staffing Services, the trade group for the personnel firms, “it’s where we’re at.”

***

Brandon Rushton imagines plots and characters for books and movies. He’s a writer; he’s meant to dream. He studied professional and script writing at Algonquin College. He’s had freelance contracts to write business reports and was commissioned to prepare two full-length scripts for a Montreal production company.

But the 23-year-old knows that if he wants to eat, he needs a regular job. He cannot be a full-time writer: “All throughout school,” he says, “I was taught that that was not really realistic.”

In Canada’s turgid post-recession economy, many in Rushton’s generation are learning to not just temper their dreams but to scale back their expectations. They’ll apply for the internships, the part-time retail positions and the low-paying, short-term contracts … because that’s what’s available.

Jobseekers aren’t the only ones noticing the scarcity of permanent positions.

In March, the Canadian Labour Congress called on Statistics Canada to change its employment surveys to more accurately reflect the “underemployed,” which includes part-time workers seeking full-time work and those who turn to low-paying self-employment when they can’t find a job.

“More Canadians are unemployed, marginally attached, or simply not engaging in the labour force,” the CLC said in a report.

And even the Canadian Chamber of Commerce, which collects a big portion of its dues from the retail sector, says hiring trends are “raising concerns about the quality of jobs being created.” A study by the business group found that the vast majority of jobs created in Canada in 2013 — 95 per cent — were part-time, and employment rates were falling for the prime 25-to-54 age group.

The warnings are not unanimous. Tammy Schirle, an associate professor of economics as Wilfrid Laurier University, studied jobs trends by age group and found that, yes, youth are having more trouble finding jobs than older workers.

But this gap, she also discovered, is traditional — and it didn’t increase significantly after the last recession.

“I am concerned that the expectations of youth are often out of line with reality,” Schirle told the House of Commons finance committee on March 25. Many of her students, she said, expect to complete their undergraduate degree and immediately find a secure, top-paying job.

Brandon Rushton has no such expectation.

He’d take that $10.25-an-hour government temp job “for the opportunity and the experience — because everything’s experience, and it adds up.”

And for the chance, even small, that it could lead to a permanent job.

That was the route for a friend fixing government computers on contract. “He was in, like, empty computer labs in office buildings and somebody found him and thought he was really good and they hired him on full-time,” Rushton says.

“That’s a success story.”

***

Thousands have found such success, jumping from two-month placements to regular positions with paid holidays, health benefits and a pension.

Their launch pad has been the temporary workforce that rose like a secret army from the great downsizing and hiring freeze of the Liberal government in the 1990s. Year by year it grew over the murmured protests of the public employee unions, eventually becoming a shadow public service with which government departments could weather fiscal year-ends, staff vacations, sick leaves.

A 2010 investigation by the Public Service Commission, the federal agency that is half HR department, half staffing watchdog, calculated the government’s yearly spending on temporary workers at more than $300 million, triple the sum of a decade earlier. Term and casual employees, it found, made up 12 per cent of the federal workforce.

Not lost on the commission was the stepping-stone nature of these jobs. A 2008 audit revealed that 80 per cent of the 86,000 full-time employees hired between 1998 and 2006 had earlier worked in government, the majority as contract workers. This “back door” approach, the commission warned, skirted government hiring policies and could be excluding more qualified candidates.

Today that door is mostly shut, if not because of policy changes after the PSC report, then certainly because of the Conservative government’s huge spending cuts of 2012. Aimed at eliminating the deficit run up in the recession, the cuts are expected to trim more than 19,000 public service jobs by 2015, a majority of them in the Ottawa area.

When a job does open up, existing employees squeezed from their own positions get first crack. Temporary employees are at the back of the line.

And this time, the reserve force could be shrinking, too. According to the Public Works department, the government does not track contract and casual staff levels. But it does track spending, and its published accounts show a drop by nearly one-half in the outlay for temporary help in the last four years, from that $300 million-plus in 2009 to $165 million in 2013.

How much of the decline is due to reduced wages and how much to fewer hires is difficult to know. What is clear to Brandon Rushton is landing that contract that could be a first step to a government career. He’s taking business classes to improve his resume, just as he studied French after leaving high school.

He’s held on to hope because of his friend’s experience, and because of a broader optimism that again might be a necessary part of being young.

“Though it’s kind of waning right now,” he admits.

***

Stephen Harper doesn’t set wage rates for government contract workers. Nor does Harper’s new finance chief, Joe Oliver. Nor does any deputy minister or other functionary in a chain that extends down to the low-level manager who might actually have contact with the temp brought in to get the office through a crunch.

Certainly, the politicians dictate overall spending, and the bureaucrats produce the line-by-line budgets that detail how much will be allocated to services and how much to office supplies and how much to short-term staffing.

But the specific hourly rates — the $11.40 for a project administrator, the $10.25 for a data entry clerk — are set by the outside personnel agencies that bid on the government tenders.

These are the actual employers of that administrator and that clerk, and their profits come from the difference between what they take in and pay out.

The margin is shrinking fast.

The capital’s employment industry has little more public profile than the workforce it supplies, but its presence is large. Staffing agency offices, in second-floor walk-ups and high in glass towers, dot the downtown streets, and the help-wanted ads produced by the job counsellors and recruitment specialists within pepper the Internet.

Martin Chénier, a longtime recruiter and chair of government relations for the Association of Canadian Search, Employment and Staffing Services, says more than 120 firms are registered in the Ottawa area for a government standing offer for staff suppliers.

But that’s down from a few years ago, and Chénier expects there soon will be fewer yet.

“We know of several members that have just gone out of business,” he says. “They’re just no longer able to operate. There’s just no money to be made.”

Firms, he notes, must pay Canada Pension, employment insurance and other costs for every employee they supply.

“They’re charging the government $15, $14 for someone, and that person, they’re having to put on their payroll, they have to pay EI, they have to pay CPP, they have to pay WSIB, they have legal implications to cover the payroll burden … there are no margins at all.”

As in any sector under pressure, those hurting seek someone to blame. Agency operators mutter about others driving down prices and even losing money on bids in the hope of forcing out competitors.

But the federal government is painted as the larger villain. Chénier said the government reneged on a 2008 agreement to move more hiring to a system meant to ensure what he describes as quality placements at fair prices. Under the arrangement, suppliers provided quotes for job classifications and were excluded from seeking contracts if their rates fell well below or above the median figure quoted.

According to Public Works public relations manager Annie Trepanier, however, the median rate calculation was dropped in 2012 “to simplify the process and encourage competitive bidding.” Trepanier says the staffing industry and government departments were consulted before the decision was made.

While taxpayers may have little sympathy for the outside suppliers and their declining cut, Chénier argues that the government’s reliance on lower bidders ignores the private industry strategy of moving to qualified suppliers, not necessarily the cheapest, to ensure that goods and services meet standards. He says there’s talk within the industry that some suppliers are “embellishing” applicant resumes to secure contracts because more qualified jobseekers won’t work for the low government rates. And those who do, he adds, often don’t stay.

“There’s extremely high turnover. The person that’s forced to accept that contract at minimum wage — the minute they find something, anything that’s more than minimum wage, they jump ship.”

Agencies that are the largest suppliers of low-wage temps have differing views. Quantum Management Service, says vice-president Anne Cote, has a large enough applicant pool that it can find candidates with the required training and experience.

“Some have them (qualifications), some don’t, but yes, we’re able to fill the mandates.”

But Jocelyne Vitanza, owner of Dare Human Resources and director of a sister firm, Azur HR, will share, to a degree, her frustration.

“This is not merely widgets,” she says. “These are people. So having access to quality talent means paying a fair …”

She stops. “How can I say? I’m very limited.”

***

Understanding why wages for federal temporary workers have fallen so far requires more than a simple supply-and-demand graph.

As University of Ottawa professor Gordon Betcherman notes, the current surplus of jobseekers is far from Canada’s first.

“In earlier periods we had unemployment rates of 10, 11, 12 per cent, and we didn’t see this kind of casualization of low-wage labour in a government two decades ago,” says the labour economist.

He believes the pay rates may instead be evidence of a longer-term, gradual shift in the human resource strategies of governments at all levels to mimic the wage-paring practices of the private sector.

“In a sense, the cost reduction pressures that the private sector has always felt are increasing — and this has been going over a long period of time — are increasingly a reality in the government, too.”

Politics are another factor, says Betcherman, part of the faculty at the School of International Development and Global Studies.

“Obviously, this is a Conservative government, so the people ultimately making decisions in Treasury Board and the Public Service Commission about personnel practices, presumably they would have different ideas about things than if we had an NDP government, for example,” he says.

The public service unions now negotiating with a government intent on huge cuts to pensions and benefits, and which once paid to have a plane pull a banner over Ottawa reading StephenHarperNousDéteste.ca (Stephen Harper hates us), would agree.

Whether driven by ideology or budget restraints, the wage cuts could also signal a shift away from the long-held belief that government should be a model employer.

“You’ve got to be a little bit sympathetic to the government,” says Betcherman, “because on the one hand they’re under pressure to minimize costs, reduce tax burdens, reduce deficits, so obviously there’s an imperative to be more efficient.

“But on the other hand they are expected to set some kind of standard in terms of the employment they offer, so they’re caught between these tensions.”

How long hourly rates for government temps remain at rock bottom, however, may depend less on attitudes and more on basic economics. The baby boomers cannot work forever. And when they leave, there will be fewer young people available to take their place.

“The longer-run challenge,” says the U of O professor, “may be how we deal with getting the kind of workforce we want in an aging society.”

Some temporary and contract jobs with the federal government now pay only minimum wage — or perhaps half of what full-time employees earn for the same work. A fat labour market makes this $10.25-an-hour rate possible, but the salary decline goes well beyond supply and demand. The temp jobs that once were a famous stepping stone to permanent work have become a low-paying end in themselves.

Recent personnel agency postings for temporary jobs in government:

Administrative assistant

Location: National Parole Board

Role: Support senior employee

Requirements: Two years experience preparing travel arrangements and travel claims in a government department; experience in organizing conferences and training sessions; experience in scheduling meetings and preparing agendas and minutes for multiple stakeholders; able to manage small budgets; familiarity with Microsoft Excel, Outlook, Word

Requirements: Extensive experience with SAP and Excel; training in computer science or related field or acceptable combination of education and experience; fluency in French and English is an asset

Duration: Unstated

Hourly salary: $10.25

Agency: Quantum

Project administrator

Location: Unnamed government department

Role: Advise senior administrator on administrative, financial and other details; take minutes at meetings with consultants and capture schedules and action items; co-ordinate and conduct quality control (analysis and processing) of all documentation

Requirements: Three years experience in general administrative support; one year experience in project administration, advanced knowledge in Microsoft Excel and PowerPoint

Requirements: English and conversational French; certificate or degree in accounting or related field or acceptable combination of training and experience; three years of relevant experience; experience with government financial system (may be required)

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Prof. Gordon Betcherman is a labour economist and demographer, is quoted in article on wage trends for temporary government employees. Photo by Jean Levac/Ottawa Citizen For Ottawa Citizen story by , CITY Assignment #116921

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